Managing costs - learn to save

As a competent manager, one of the areas where you can prove your ability is in cost reduction.
There is nothing more frustrating than unnecessary expenditures that get out of control. One thing that every business strives for is cash. There seems to be a constant demand for cash regardless of how large or small your business is.

As a manager in a small firm, I felt challenged by the unnecessary expenditures that were not geared toward generating profit. I also felt excited by this challenge, since controlling cost required simple but firm steps by management in teaching staff how to reduce cost. I developed the following strategies for my staff to follow:

1-Go green: you would be surprised by how much money a firm would spend on items like (coffee cups, paper towels, copy papers, cleaning supplies, etc.). I cut the spending of coffee cups to zero; each employee was giving a reusable company cup to use. The same went for other office supplies, but not to eliminate supplies all together, but to reduce consumption. You can train your staff to use less air conditioning and use cooling fans; it’s not only saving you money, but also helping the environment.

2-Renegotiate with your suppliers: constantly ask your suppliers for better prices, you would be surprised at how many suppliers are ready to renegotiate price with you, Many firms forget to constantly check with their suppliers for better deals, some of the supplying contracts may have been signed years ago, but no one seems to check the contracts for updating and reminding suppliers of their competitors for your business.

3-Do it yourself: it should be part of the firm’s culture to encourage employees to reduce cost by asking them to do simple tasks such as (changing light bulbs, changing filters, fixing minor computer and network problems, cleaning their desks, etc.), it may sounds non work related to ask your employees to do such tasks, but if you want to survive, you need to cut costs.

4-Reward your employees for participating in cost reduction: give small bonuses from the money you saved by reducing cost to your employees, this will show them the effects of reducing costs - and produce a graph for your employees to see how you are progressing and set targets so they can see how close they are to receiving a bonus.

In an increasing competitive and environmentally aware world, reducing cost and reducing consumption, will add great value to your firm.